North Carolina’s craft brewers are preparing for the effects of newly doubled steel and aluminum tariffs — a move expected to significantly impact the industry. The pressure comes at a time when the state leads the nation in craft brewing; a 2024 report ranked North Carolina as the No. 1 state for craft breweries.
Les Stewart, co-owner and chief brewing officer of Trophy Brewing, based in Raleigh, told the Carolina Journal that two of his aluminum vendors immediately reacted when the threat of tariffs was announced earlier this year. The vendors announced a 3% increase and acknowledged the uncertainty of the situation, warning that the rise could go up due to the volatility of the trade climate.
Trophy Brewing is not as bad off as some, however. Stewart told CJ that he has spoken with other vendors who expect to see a 15-20% increase. Stewart predicts that the Trump administration’s constant yo-yoing on tariffs has caused vendors to hold off and see what happens regarding the tariffs.
“So in spite of the fact that we are now looking down the barrel at actual increases in costs of raw aluminum coming into the United States, we still haven’t seen an updated adjustment to that 3% we saw earlier in the year,” said Stewart.
Stewart also explained how the industry was impacted in 2018 when steel and aluminum tariffs were first implemented.
“At that point in time, the industry really hadn’t seen anything like it, and you didn’t know how to react,” explained Stewart. “I think we saw an 8% increase or so at that point in time; I don’t think of which was ever rolled back. But at the same time, there was enough elasticity in the market in terms of aluminum cans, and what we were paying for them, that it wasn’t the biggest hit in the world. We kind of went through it, and it kind of got pulled back, and prices stabilized to the extent that we really hadn’t seen an increase in prices at all since then. Maybe a small take-up here and there, but below the cost of living,”
Stewart said that while they have not felt much of an impact yet from the tariffs, the worst thing for them would be if the tariffs were suddenly cranked to 10%. It could be much more detrimental for their business than the boil the frog approach, where there’s a 2% increase this year, 2% next year, and 2% the following year.
“It’s the volatility that causes the uncertainty,” continued Stewart. “That really scares us more than anything, but in terms of actual impact, we’re still waiting to see what happens. Part of that is because we benefit from a small business model that relies on vendors.”
Despite having yet to feel a significant impact from the tariffs, there is concern that even though the supply chain for local breweries is mainly domestic, they are not entirely shielded from the impact of the tariffs, as international prices can often impact domestic prices.
“Steel tariffs also will increase the price of supplies relied on by America’s small and independent brewers,” wrote Marc Sorini, vice president of government affairs for the National Brewer’s Association. “Most steel kegs used in the US are sourced from European Union countries. Brewing equipment and components of brewing equipment are often made in China or the European Union.”
According to a National Brewer’s Association report, 76% of all packaged US beer is sold in aluminum cans. The association ranks North Carolina 10th in economic impact and eighth in production.
“Tariffs on imported aluminum and steel, have the potential to place an undue burden on North Carolina’s craft beer manufacturing industry,” said Lisa Parker, executive director of the NC Craft Brewers Guild, said in a press release. “In an industry with already tight margins, our small business owners are rightfully concerned about how this will impact their future.”
According to Stewart, another way small breweries are vulnerable to the tariff increase is that they are unable to stockpile supplies like ingredients or aluminum cans in the way that larger companies can. Small breweries like Trophy Brewing could shift more towards the draft side of things if there continues to be an increase or more of an impact of the tariffs on aluminum is felt.
Local breweries remain uncertain about how to proceed amid a trade war that could dramatically impact one of the industries in which North Carolina leads the nation.
The post Craft brewers bracing for economic hit, as steel and aluminum tariffs double first appeared on Carolina Journal.